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EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
BY AND AMONG
CROWN GROUP, INC.
AND
THE HOLDERS OF THE OUTSTANDING CAPITAL STOCK OF
▇▇▇▇▇▇▇ HOLDING COMPANY
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TABLE OF CONTENTS
1. Sale and Purchase of the Shares..........................................................................2
2. Purchase and Payment.....................................................................................2
(a) Purchase Price. ................................................................................2
(b) Conversion Rights if Crown Notes are Prepaid. ..................................................4
(c) Closing Date Cash. .............................................................................4
(d) Further Assurances. ............................................................................5
3. Representations and Warranties of the Sellers............................................................5
(a) Organization and Standing of the Company........................................................5
(b) Subsidiaries....................................................................................5
(c) Capital Stock...................................................................................6
(d) Financial Statements............................................................................6
(e) Absence of Certain Changes or Events............................................................8
(f) Tax Matters....................................................................................10
(g) Contracts......................................................................................12
(h) Title to Properties and Related Matters........................................................13
(i) Consents and Approvals.........................................................................14
(j) Receivables....................................................................................14
(k) Stockholders' Equity, Etc. ...................................................................14
(l) Litigation and Proceedings.....................................................................15
(m) Insurance Coverage.............................................................................15
(n) Employee Benefits..............................................................................17
(o) Employee Relations.............................................................................18
(p) Patents, Trademarks and Licenses...............................................................19
(q) Approvals, Authorizations and Regulations......................................................19
(r) Inventory......................................................................................20
(s) Guarantees, Etc................................................................................20
(t) OSHA...........................................................................................20
(u) Officers, Directors and Employees..............................................................20
(v) Absence of Adverse Agreements..................................................................21
(w) No Defaults....................................................................................21
(x) Banks, Signatories.............................................................................22
(y) No Conflicts...................................................................................22
(z) Books and Records..............................................................................22
(aa) Brokers........................................................................................23
(bb) Environmental Matters..........................................................................23
(cc) Permits, Licenses, Etc.........................................................................25
(dd) Software.......................................................................................26
(ee) Title to Shares and Authority..................................................................26
(ff) Disclosure.....................................................................................27
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4. Representations and Warranties of the Purchaser.........................................................27
(a) Organization, Standing and Authority of the Purchaser..........................................27
(b) No Violation...................................................................................27
(c) Corporate Proceedings of the Purchaser.........................................................28
(d) Financial Statements...........................................................................28
(e) Brokers........................................................................................29
(f) Investment.....................................................................................29
(g) Post-Closing Indemnity.........................................................................29
5. Additional Covenants and Agreements.....................................................................30
(a) Access to Records..............................................................................30
(b) Conduct of Business............................................................................31
(c) Preservation of Goodwill.......................................................................31
(d) Amendment to Schedules.........................................................................31
(e) Resignations...................................................................................32
(f) Delivery of Materials..........................................................................32
(g) Covenant Against Competition...................................................................32
(h) Exclusivity....................................................................................33
(i) Sellers' Release of Claims.....................................................................34
(j) Lease of Facilities............................................................................34
(k) Distribution of Dynamic and AffiniTech.........................................................35
(l) Escrow of Tax Liability........................................................................35
(m) Escrow of Liability for Breaches of Representations, Warranties and Covenants..................37
(n) Crown Financial Statements.....................................................................38
6. Conditions to Obligations of the Purchaser..............................................................38
(a) Representations and Covenants..................................................................38
(b) Opinion of Counsel.............................................................................39
(c) No Damage or Destruction.......................................................................40
(d) No Material Adverse Changes....................................................................41
(e) Absence of Litigation..........................................................................41
(f) Consents.......................................................................................41
(g) Financing......................................................................................41
(h) Lease of Facilities............................................................................41
(i) Employment Agreements..........................................................................41
(j) Escrow Agreements..............................................................................42
(k) Due Diligence..................................................................................42
(l) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing and Approval..........................................................42
7. Conditions to Obligations of the Sellers. .............................................................42
(a) Representations and Covenants..................................................................42
(b) Opinion of Counsel.............................................................................43
(c) Certified Resolutions..........................................................................44
(d) No Material Adverse Changes....................................................................44
(e) Lease of Facilities............................................................................44
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(f) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing and Approval..........................................................44
8. The Closing.............................................................................................44
9. Nature and Survival of Representations and Warranties...................................................45
(a) Nature of Statements...........................................................................45
(b) Survival of Representations and Warranties.....................................................45
10. Indemnification by Sellers and Related Matters..........................................................46
(a) Indemnification by Sellers.....................................................................46
(b) Procedure for Making Claims....................................................................46
11. Indemnification by the Purchaser and Related Matters....................................................47
(a) Indemnification by the Purchaser...............................................................47
(b) Procedure for Making Claims....................................................................48
12. Expenses................................................................................................49
13. Notices.................................................................................................49
14. Satisfaction of Conditions; Termination; Liquidated Damages.............................................50
(a) Best Efforts to Satisfy Conditions.............................................................50
(b) Termination....................................................................................51
(c) Failure of the Purchaser to Close..............................................................52
15. Miscellaneous...........................................................................................52
(a) Assignment.....................................................................................52
(b) Section and Paragraph Headings.................................................................53
(c) Amendment......................................................................................53
(d) Entire Agreement...............................................................................53
(e) Knowledge......................................................................................53
(f) Public Announcements...........................................................................53
(g) Counterparts...................................................................................54
(h) Governing Law..................................................................................54
(i) Joinder of Spouses.............................................................................54
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated on or as of December 1, 1998, by
and among CROWN GROUP, INC., a Texas corporation (the "Purchaser"), and the
individuals and entities listed on Table I attached hereto that are the
shareholders (individually, a "Seller" and collectively, the "Sellers") of
▇▇▇▇▇▇▇ HOLDING COMPANY, an Arkansas corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Sellers are the owners of one hundred (100%) percent of
the issued and outstanding shares of Common Stock of the Company, such shares
being of the class and par value, and owned by the respective Sellers in the
respective amounts as set forth in Table I attached hereto (all of such shares
of Common Stock herein collectively referred to as the "Shares"), and the
Sellers desire to sell the Shares to the Purchaser, and the Purchaser desires to
purchase the Shares, all upon the terms and conditions set forth herein; and
WHEREAS, the Company has two (2) wholly-owned subsidiaries engaged in
the used vehicle sales and finance business, which subsidiaries are AMERICA'S
CAR-MART, INC., an Arkansas corporation ("America's Car-Mart"), and CAR-MART,
INC., an Arkansas corporation ("Car-Mart") (individually, a "Car-Mart
Subsidiary", and collectively, the "Car-Mart Subsidiaries");
WHEREAS, this Agreement sets forth the terms and conditions to which
the parties have agreed and further contemplates the execution and delivery of
certain collateral agreements and the consummation of certain related
transactions hereinafter described;
NOW, THEREFORE, in consideration of the mutual promises and covenants
of the parties, and subject to the terms and conditions set forth herein, the
parties agree as follows:
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1. Sale and Purchase of the Shares. Each of the Sellers agrees, subject
to the conditions to the Seller's obligations herein set forth, to sell, assign
and convey to the Purchaser on the Closing Date (as hereinafter defined), free
and clear of all security interests, pledges, liens, charges and encumbrances,
the number of Shares set forth opposite the name of such Seller in Table I and
to transfer and deliver to the Purchaser the certificates evidencing such
Shares, duly endorsed in blank or accompanied by stock powers duly executed in
blank. The Purchaser agrees, subject to the conditions to its obligations herein
set forth, to purchase and accept the Shares for the consideration set forth in
Section 2(a) hereof.
2. Purchase and Payment.
(a) Purchase Price. The total purchase price (the "Purchase
Price") for the Shares is Forty-One Million ($41,000,000) Dollars,
payable by the Purchaser to the Sellers at Closing (as hereinafter
defined), as follows:
(i) Thirty-Three Million Five Hundred Thousand
($33,500,000) Dollars shall be payable to the Sellers by wire
transfer funds, as follows:
Seller Cash
------ ----
▇▇▇▇ ▇▇▇▇▇▇▇ Revocable Trust, u/d/t January 12, 1998 $27,430,048.32
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 349,758.30
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Children's Trust #1 $ 193,124.16
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 31,111.83
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Children's Trust #1 $ 193,124.16
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 31,111.83
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Children's Trust #1 $ 193,124.16
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ $ 31,111.83
Bart ▇▇▇▇▇ ▇▇▇▇▇▇▇ Children's Trust #1 $ 224,235.99
▇▇▇ ▇. ▇▇▇▇▇ $ 176,460.62
▇▇▇▇▇▇▇ Charitable Remainder Annuity Trust $ 4,646,788.80
--------------
Total $33,500,000.00
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The Tax Escrow Account (as hereinafter defined) and the Representations and
Warranties Escrow Account (as hereinafter defined) shall be funded at Closing
out of the cash proceeds set forth above by ▇▇▇▇ ▇▇▇▇▇▇▇ Revocable Trust u/d/t
January 12, 1998 in accordance with Sections 5(l) and (m) hereof, respectively.
In addition, at Closing, the Purchaser shall deduct from the cash portion of the
Purchase Price the amount specified by the Sellers as the fee for Llama Company
related to this Agreement, and at Closing the Purchaser shall pay, or cause the
Company to pay, such fee to Llama Company on behalf of the Sellers.
(ii) Seven Million Five Hundred Thousand ($7,500,000)
Dollars shall be evidenced by and payable to the Sellers in
accordance with the terms of promissory notes issued by the
Purchaser, each in the individual amounts set forth below:
Seller Crown Notes
------ -----------
▇▇▇▇ ▇▇▇▇▇▇▇ Revocable Trust u/d/t
January 12, 1998 $6,600,000
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Children's Trust #1 $ 200,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Greehey Children's Trust #1 $ 200,000
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Children's Trust #1 $ 200,000
Bart ▇▇▇▇▇ ▇▇▇▇▇▇▇ Children's Trust #1 $ 200,000
▇▇▇ ▇. ▇▇▇▇▇ $ 100,000
----------
Total $7,500,000
The promissory notes set forth above are hereinafter called the "Crown Notes".
The Crown Notes shall bear interest at the rate of eight and one-half (8 1/2%)
percent per annum, such interest to be payable quarterly commencing ninety (90)
days after the Closing Date, with the principal and all accrued and unpaid
interest being due and payable five (5) years from the Closing Date. The Crown
Notes shall be guaranteed by America's Car-Mart. If prior to maturity of the
Crown Notes the Company consummates an Initial Public Offering (as hereinafter
defined), the holders of the Crown
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Notes shall have the right and option to convert (the "Conversion Right") the
outstanding principal balance of the Crown Notes into shares of Common Stock of
the Company, at the conversion rate equal to the Initial Public Offering price
per share, less one-half (1/2) of the amount of underwriting discount per share
(the "Exercise Price"). The term "Initial Public Offering" shall mean the first
public offering of shares of Common Stock of the Company effected by the Company
pursuant to a registration statement that has been declared effective under the
Securities Act of 1933, as amended (the "1933 Act"). The Crown Notes shall be in
substantially the form of Exhibit "A" attached hereto, with the blanks
appropriately completed. The guarantee of the Crown Notes by America's Car-Mart
shall be in substantially the form of the Guaranty Agreement (the "Guaranty
Agreement") attached hereto as Exhibit "B". The Conversion Right shall be
exercised pursuant to the terms of the Warrant to Purchase Shares of Common
Stock of ▇▇▇▇▇▇▇ Holding Company in substantially the form of Exhibit "C"
attached hereto (the "Warrant").
(b) Conversion Rights if Crown Notes are Prepaid.
Notwithstanding the repayment of the Crown Notes, the holders of the
Crown Notes shall have the right to exercise their respective
Conversion Rights by the payment of the Exercise Price in cash in
accordance with, and subject to, the limitations set forth in the
Warrant.
(c) Closing Date Cash. As set forth in Section 3(k) hereof,
America's Car-Mart's cash on the Closing Date (the "Closing Date Cash")
shall be not less than $850,000. Of such Closing Date Cash, $350,000
shall be deemed (for accounting purposes) to have been distributed to
▇▇▇▇ ▇▇▇▇▇▇▇ Revocable Trust, u/d/t January 12, 1998, on the day
immediately preceding the Closing Date, and at Closing the balance of
such Closing Date Cash (which shall be not less than $500,000) shall be
retained by America's Car-Mart.
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(d) Further Assurances. The Sellers hereby agree to execute
and deliver from time to time at the request of the Purchaser and
without further consideration, such additional instruments of
conveyance and transfer and to take such other action as the Purchaser
may reasonably require to more effectively convey, assign, transfer and
deliver the Shares to the Purchaser.
3. Representations and Warranties of the Sellers. The Sellers, jointly
and severally, represent and warrant to and agree with the Purchaser that:
(a) Organization and Standing of the Company. The Company and
each of the Car-Mart Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Arkansas. The Company and the Car-Mart Subsidiaries have full
corporate power and authority to conduct their respective businesses as
they are now being conducted and are qualified to do business as a
foreign corporation and are in good standing in each jurisdiction as
set forth on Schedule 3(a) where such qualification is required. The
Sellers have delivered to the Purchaser complete and correct copies of
the Articles of Incorporation (duly certified by the Secretary of State
of the State of Arkansas) and By-Laws (certified by the Secretary of
the Company) of the Company and the Car-Mart Subsidiaries as in effect
on the date hereof.
(b) Subsidiaries. The Company has four (4) subsidiaries,
America's Car-Mart, Car-Mart, Dynamic Enterprises, Inc., an Arkansas
corporation ("Dynamic") and AffiniTech, Ltd., an Arkansas corporation
("AffiniTech"). The Car-Mart Subsidiaries, Dynamic and AffiniTech are
hereinafter collectively referred to as the "Subsidiaries". Except for
the Subsidiaries, the Company does not (i) own, directly
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or indirectly, any of the outstanding capital stock or securities
convertible into capital stock of any other corporation, or (ii) own,
directly or indirectly, any participating interest in any partnership,
joint venture or other business enterprise.
(c) Capital Stock. The authorized capital stock of the Company
consists of 1,000 shares of Common Stock, no par value per share, of
which, on the date hereof, 492.34 shares are validly issued and
outstanding, fully paid and nonassessable and one hundred (100%)
percent of which are owned by the Sellers. The authorized capital stock
of America's Car-Mart consists of 2,000 shares of Common Stock, no par
value per share, of which, on the date hereof, 100 shares are issued
and outstanding, fully paid and non-assessable and one hundred (100%)
percent of which are owned by the Company. The authorized capital stock
of Car-Mart consists of 2,000 shares of Common Stock, no par value per
share, of which, on the date hereof, 100 shares are issued and
outstanding, fully paid and non-assessable and one hundred (100%)
percent of which are owned by the Company. None of the Company and the
Car-Mart Subsidiaries has any treasury shares, outstanding
subscriptions, options or other agreements or commitments obligating it
to issue shares of capital stock. Between the date hereof and the
Closing Date, the Sellers will not, and will not permit the Company and
the Car-Mart Subsidiaries to issue or enter into any subscriptions,
options, agreements or other commitments in respect of the issuance,
transfer, sale, repurchase or encumbrance of any shares of capital
stock.
(d) Financial Statements. The Sellers have delivered to the
Purchaser (i) the consolidated balance sheets of the Company and the
Subsidiaries at their
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May 31, 1997 and their May 31, 1998 fiscal year ends and the related
consolidated statements of income, stockholders' equity and cash flows
for the Company and the Subsidiaries, as certified by Ernst & Young
LLP, Certified Public Accountants; and (ii) the consolidated balance
sheets of the Company and the Car-Mart Subsidiaries at July 31, 1998
and the related consolidated statements of income of the Company and
the Car-Mart Subsidiaries for the two (2) month period then ended, as
certified by the President of the Company (collectively, the "Company's
Financial Statements"). All of the Company's Financial Statements (x)
are in accordance with the books of account and records of the Company
and the Subsidiaries (or the Car-Mart Subsidiaries, as the case may
be) and fairly present the financial position and results of operations
of the Company and the Subsidiaries (or the Car-Mart Subsidiaries, as
the case may be) as of the dates and for the periods indicated, (y)
contain and reflect adequate reserves for all known material
liabilities and (z) were prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior
accounting periods ("GAAP"). Except to the extent reflected or reserved
against in the Company's Financial Statements, or any Schedule provided
for in this Section 3, the Company and the Car-Mart Subsidiaries are
not obligated for, nor are any of their respective assets or properties
subject to, any liabilities (whether accrued, absolute, contingent or
otherwise) or adverse obligations, whether or not such liabilities or
obligations are normally shown or reflected on a balance sheet, other
than liabilities and obligations arising in the ordinary course of
business since the date of the most recent Company's Financial
Statements, none of which are material and adverse. The most recent
Company's Financial Statements
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correctly reflect the liabilities of the Company and the Car-Mart
Subsidiaries at July 31, 1998.
(e) Absence of Certain Changes or Events. Except as set forth
in any Schedule delivered to the Purchaser pursuant to this Section 3
or except as contemplated by this Agreement, since July 31, 1998, none
of the Company and the Car-Mart Subsidiaries has:
(i) issued, delivered or agreed to issue or deliver
any stock, bonds or other corporate securities (whether
authorized and unissued or held in the treasury) or granted or
agreed to grant any options, warrants or other rights calling
for the issuance thereof;
(ii) except as otherwise permitted herein, borrowed
or agreed to borrow any funds or incurred, or become subject
to, any obligation or liability (absolute or contingent)
except in the ordinary course of business in customary
amounts;
(iii) paid any obligation or liability (absolute or
contingent) except in the ordinary course of business in
customary amounts;
(iv) paid any obligation or liability (absolute or
contingent) other than current liabilities reflected in or
shown on the Company's Financial Statements (or the notes
thereto) and obligations or liabilities incurred since the
date thereof and permitted to be so incurred by the foregoing
clause (ii) of this Section (e);
(v) declared or made, or agreed to declare or make,
any payment of dividends or distribution of any assets of any
kind
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whatsoever to the Sellers or Sellers' Affiliates (as
hereinafter defined), or purchased or redeemed any shares of
its capital stock;
(vi) sold or transferred, or agreed to sell or
transfer, any of its assets, properties or rights (except
sales in the ordinary course of business) or cancelled or
agreed to cancel, any debts or claims;
(vii) entered or agreed to enter into any agreement
or arrangement granting any preferential rights to purchase
substantially all of the assets, properties or rights of the
Company or the Car-Mart Subsidiaries (including management and
control thereof), or requiring the consent of any party to the
transfer and assignment of such assets, properties or rights
(or changes in management or control thereof), or providing
for the merger or consolidation of the Company or the Car-
Mart Subsidiaries with or into another corporation;
(viii) waived any rights of material value;
(ix) except in the ordinary course of business, made
or permitted any amendment or termination of any contract,
agreement or license to which it is a party;
(x) made any accrual or arrangement for the payment
of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer
or employee;
(xi) except for the salary of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
increased the rate of compensation payable or to become
payable by it to any of its officers or key employees
compensated at a rate in excess of
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$25,000 per annum; or made any increase in any profit sharing,
bonus, incentive, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or
arrangement made to, for or with any such officers or key
employees;
(xii) committed to purchase inventories, parts,
supplies or other items in excess of its normal, ordinary and
usual requirements or at excessive prices, all computed based
on historical practices of the Company and the Car-Mart
Subsidiaries;
(xiii) experienced any significant labor trouble; or
(xiv) suffered any material losses or any damage,
destruction or loss, whether or not covered by insurance,
which materially and adversely affects its assets or business,
or had any material adverse change in the business,
operations, financial condition or prospects of the Company or
the Car-Mart Subsidiaries.
Between the date hereof and the Closing Date, the Sellers shall not permit the
Company and the Car-Mart Subsidiaries to do any of the things listed in Clauses
(i) through (xii) of this Section (e) without the prior written consent of the
Purchaser.
(f) Tax Matters. All United States, state, county and local
and other taxes, including without limitation, income taxes, payroll
taxes, corporate franchise taxes, sales, excise and use taxes and ad
valorem taxes, due and payable by the Company and the Subsidiaries for
the periods ended prior to the date hereof, have been paid or accrued
and there is no further liability (whether or not disclosed on
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their respective tax returns) for any taxes relating to such periods,
and no interest or penalties have accrued or are accruing with respect
thereto. The Company and the Subsidiaries have timely filed in correct
form all tax returns and reports required to be filed by them on or
before the date of this Agreement with all such taxing authorities. The
liability for Federal, state and local taxes reflected on the most
recent Company's Financial Statements, if any, represents at the date
thereof, reasonable and adequate provision for the payment of all
accrued and unpaid Federal, state and local taxes of the Company and
the Subsidiaries . No assessments of deficiencies have been made
against the Company or the Subsidiaries , and no extensions of time are
in effect for the filing of any returns or the assessment of
deficiencies. Except for a notice of audit from the Internal Revenue
Service ("IRS") with respect to the Company's fiscal year ended May 31,
1996 (the "1996 IRS Audit"), no examinations by the Internal Revenue
Service of the Federal income tax returns of the Company or the
Subsidiaries for any taxable year are presently pending. The Sellers
have delivered to the Purchaser true and complete copies of all of the
Company's and the Subsidiaries' Federal and state Income Tax Returns
and payroll tax returns for each of their fiscal years from 1994
through 1997. The liability of the Company and the Subsidiaries for all
income taxes for all periods prior to the Closing Date shall be the
responsibility of, and shall be paid by, the Sellers. At Closing, the
Sellers shall deposit in escrow an amount reasonably estimated to be
equal to the liability of the Company and the Subsidiaries for their
current and deferred taxes in accordance with Section 5(l) hereof.
Dynamic and AffiniTech shall be included through the date immediately
preceding the Closing
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Date in the consolidated Federal income tax return filed under Section
1501 of the Internal Revenue Code of 1986, as amended (the "Code") by
the Company as the common parent of the Subsidiaries.
(g) Contracts. Schedule 3(g) hereto is a complete and accurate
listing of all mortgages, liens, licenses, leases, sales representation
agreements, purchase orders (with unexpired terms of more than thirty
(30) days) and all other contracts, undertakings, commitments and
agreements of the Company and the Car-Mart Subsidiaries to which or by
which they are bound, whether written or oral, (x) entered into in the
ordinary course of business involving the payment by or to the Company
or the Car-Mart Subsidiaries of more than $25,000 in the aggregate with
respect to any such contract, undertaking, commitment or agreement, (y)
entered into other than in the ordinary course of business, or (z) with
any Sellers' Affiliates (the "Contracts"). For the purposes of this
Agreement, the term "Sellers' Affiliates" shall include all
"affiliates" of the Sellers, the Company and the Car-Mart Subsidiaries,
as such terms are defined in the rules and regulations promulgated by
the Securities and Exchange Commission under the 1933 Act. Except as
set forth on Schedule 3(g), each and all of the Contracts have been
duly executed by, or assigned to, the Company or the Car-Mart
Subsidiaries, are currently in effect, are valid and binding upon the
parties thereto and are enforceable in all material respects in
accordance with their terms. The Sellers are not aware of any facts
that would prevent the performance of any of the Contracts and all such
Contracts shall survive the Closing. Neither the Company or the
Car-Mart Subsidiaries, nor to the best of the Sellers' knowledge, any
other party, is in default under any one or more of the Contracts, nor
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has any claim of default been asserted by the Company or the Car-Mart
Subsidiaries or any such other party. Neither the Company nor the
Car-Mart Subsidiaries has committed any act and, to the best of the
Sellers' knowledge, there has been no omission which will result in the
breach by the Company or the Car-Mart Subsidiaries of any Contract.
(h) Title to Properties and Related Matters. Schedule 3(h)
hereto is a complete list of all personal property owned by the Company
and the Car-Mart Subsidiaries. The assets reflected in Schedule 3(h)
and in the Company's Financial Statements were at the date thereof,
and, except for assets consumed or disposed of in the ordinary course
of business since the date thereof, are now owned by the Company or the
Car-Mart Subsidiaries by good title, free and clear from all security
interests, mortgages, liens, claims, defects and encumbrances except
liens, charges or encumbrances discussed or referred to in the
Company's Financial Statements, the related notes or schedules thereto
or in Schedule 3(h) delivered to the Purchaser pursuant to this Section
3. Except as disclosed in Schedule 3(h), all such assets are in good
operating condition and repair, subject to ordinary wear and tear. All
of such assets have been properly maintained, with no extraordinary
maintenance planned or anticipated, and are adequate and sufficient for
the operation of the Company's and the Car-Mart Subsidiaries' business
as historically operated by the Company and the Car-Mart Subsidiaries.
There are no material capital expenditures currently contemplated or
necessary to maintain the current operation of the Company's and the
Car-Mart Subsidiaries' business. All mortgages, liens and security
interests (if
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any) to which the assets of the Company and the Car-Mart Subsidiaries
are subject shall be released at Closing. The Company does not own any
real property.
(i) Consents and Approvals. Except as set forth in Schedule
3(i) hereof, no notification, authorization, permit, consent or
approval of, or notice to, or filing with, any governmental or
regulatory authority or other third party is required to be obtained,
given or made, or waiting period required to expire as a condition to
the lawful execution and delivery of this Agreement, the consummation
by the Sellers of the transaction contemplated herein, or the
fulfillment of the terms and compliance with the provisions hereof.
(j) Receivables. All notes receivable, contracts receivable
and accounts receivable (collectively, the "Receivables") are properly
reflected on the Company's and the Car-Mart Subsidiaries' books and
records, are valid and have arisen in the ordinary course of business.
None of such Receivables has been the subject of any factoring by the
Company or the Car-Mart Subsidiaries. Schedule 3(j) sets forth a
complete and accurate summary of all Receivables by individual lot
locations as of July 31, 1998, which summary includes the aging of such
Receivables.
(k) Stockholders' Equity, Etc. At Closing, the Company's
stockholders' equity, cash, Receivables (net of unearned interest and
an allowance for loan losses as hereinafter set forth) and inventory,
determined in accordance with GAAP, will not be less than the
following:
Company
Closing Date
------------
Cash $ 850,000
Receivables $45,500,000
Inventory $ 1,000,000
Stockholders' Equity $45,000,000
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America's Car-Mart's total liabilities (including payables to Sellers'
Affiliates), determined in accordance with GAAP, were, as of July 31, 1998,
$8,927,364. On the Closing Date the Company's total liabilities shall be no more
than $2,000,000 plus the amount of income taxes payable (current and deferred)
by the Company. At Closing, the Company's total liabilities shall consist only
of accounts payable, commissions payable, inventory payable and income taxes
payable (current and deferred), and shall not include any liabilities to (i)
Dynamic, (ii) AffiniTech or (iii) any Seller or Sellers' Affiliates. The amount
of the Company's and the Subsidiaries's liability for income taxes (current and
deferred) shall be deposited in escrow by the Sellers in accordance with Section
5(l) hereof. The Company's accounts referenced in this Section 3(k) shall be
determined on a consolidated basis with the Car-Mart Subsidiaries, and for
purposes of the calculation of the minimum stockholder's equity and Receivables,
the allowance for loan losses on finance receivables shall be 2.89% of the
principal balance of the finance receivables.
(l) Litigation and Proceedings. Except as described in
Schedule 3(l), there are no actions, suits or proceedings pending or
threatened against or affecting the Company, the Car-Mart Subsidiaries
or the Sellers, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind, which
involve the possibility of any judgment or liability not fully covered
by casualty or liability insurance, and neither the Company nor the
Car-Mart Subsidiaries are in default with respect to any judgment,
order, writ, injunction, decree, award, or, to the best of the Sellers'
knowledge and belief, in default with respect to any rule or regulation
of any court, arbitrator or governmental department, commission, board,
bureau, agency or instrumentality.
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(m) Insurance Coverage. Schedule 3(m) sets forth each
insurance policy (including policies providing property, casualty,
liability and workers' compensation coverage and bond and surety
arrangements) to which the Company and the Car-Mart Subsidiaries have
been a party, a named insured or otherwise the beneficiary of coverage
at any time within the past year (except as to insurance policies owned
by third party vendors, contractors and clients of the Company or the
Car-Mart Subsidiaries which have contractually named the Company or the
Car-Mart Subsidiaries as insured or provided other benefits of coverage
as a result of contractual liability coverage, which policies need not
be listed on Schedule 3(m) but shall be made available for inspection
by Purchaser's representatives). With respect to each such insurance
policy owned by the Company and the Car-Mart Subsidiaries: (A) the
policy is legal, valid, binding, enforceable and in full force and
effect with respect to the periods and risks which such policy purports
to insure; (B) the policy will continue to be legal, valid, binding,
enforceable and in full force and effect in accordance with its terms
on the same terms immediately following the consummation of the
transactions contemplated hereby; (C) neither the Company nor the
Car-Mart Subsidiaries are in breach or default (including with respect
to the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such
a breach or default, or permit termination, modification or
acceleration under the policy; and (D) no party to the policy has
repudiated any provision thereof. To the best knowledge of the Sellers,
the Company and the Car-Mart Subsidiaries have been covered during the
past five
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years by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during such period. Schedule 3(m)
describes any self-insurance arrangements affecting the Company and the
Car-Mart Subsidiaries. "Self insurance arrangements" means any
arrangement by which the Company and the Car-Mart Subsidiaries have
assumed risks in scope and amount customarily insured by businesses in
the Company's and the Car-Mart Subsidiaries' industry and geographic
region.
(n) Employee Benefits.
(i) The Company and the Car-Mart Subsidiaries have
complied and currently are in compliance, both as to form and
operation, in all material respects with the applicable
provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the Code, respectively, with
respect to each "employee benefit plan" as defined under
Section 3(3) of ERISA. Each employee benefit plan of the
Company and the Car-Mart Subsidiaries (the "Plan") is
described in Schedule 3(n), and a copy of each Plan has been
delivered to the Purchaser.
(ii) Neither the Company nor the Car-Mart
Subsidiaries have ever maintained, adopted or established,
contributed or been required to contribute to, or otherwise
participated or been required to participate in, a
"multiemployer plan" (as defined in Section 3(37) of ERISA).
No amount is due or owing from the Company or any Car-Mart
Subsidiary on account of any withdrawal therefrom.
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(iii) Neither the Company nor the Car-Mart
Subsidiaries have incurred any liability with respect to a
Plan, including, without limitation, under ERISA, (including,
without limitation, Title I or Title IV of ERISA, other than
liability for premiums due to the Pension Benefit Guaranty
Corporation ("PBGC")), the Code or other applicable law, which
has not been satisfied in full and, to the best knowledge of
the Sellers, no event has occurred, and there exists no known
condition or set of circumstances, which could result in the
imposition of any liability with respect to a Plan, including,
without limitation, under ERISA (including, without
limitation, Title I or Title IV of ERISA), the Code or other
applicable law with respect to the Plan.
(iv) Neither the Company nor the Car-Mart
Subsidiaries have any outstanding commitments to provide or to
cause to be provided any severance or other post-employment
benefit, salary continuation, termination, disability, death,
retirement, health or medical benefit or similar benefit to
any person (including, without limitation, any former or
current employee) that has not been reflected in the Company's
Financial Statements or is not included in any Plan disclosed
on Schedule 3(n).
(o) Employee Relations. The Company and the Car-Mart
Subsidiaries are in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment
and wages and hours of employees,
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and there is no labor strike, dispute, slowdown or representation
campaign or work-stoppage pending or threatened with respect to
employees of the Company or the Car-Mart Subsidiaries. There is not,
pending or threatened, any unfair labor practice complaint against the
Company or the Car-Mart Subsidiaries pending before any relevant
authority or union representation petition respecting the employees of
the Company or the Car-Mart Subsidiaries.
(p) Patents, Trademarks and Licenses. Neither the Company nor
the Car-Mart Subsidiaries have any patents or patent applications
pending. The Company and the Car-Mart Subsidiaries own all trademarks,
trade names and copyrights (including, without limitation, the
trademarks and trade names "Car-Mart" and "Discount Auto") for the
conduct of its business as currently conducted, and the conduct of such
business does not conflict with or infringe upon any trademark, trade
name, trade secret or copyright of others. Neither the Company nor the
Car-Mart Subsidiaries have received any notice of any claim of
infringement or other complaint that its operations conflict with or
infringe upon the patents, trade names, trademarks, trade secrets,
copyrights or product formulas of others. The Company and the Car-Mart
Subsidiaries are the owners of the trademark registrations for "Car-
Mart" and "Discount Auto" set forth on Schedule 3(p) attached hereto,
including all goodwill associated therewith and any variations thereof
which would be likely to cause confusion, mistake or deception, which
registrations are in full force and effect.
(q) Approvals, Authorizations and Regulations. The Company's
and the Car-Mart Subsidiaries' business is being conducted in
compliance with all applicable laws, ordinances, rules and regulations
of all governmental authorities, and neither
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the Company, the Car-Mart Subsidiaries, nor any officer, director,
stockholder, agent or employee has violated, in any material respect,
any law, ordinance, rule or regulation in connection with the Company's
and the Car-Mart Subsidiaries' business. Further, neither the Company
nor the Car-Mart Subsidiaries have received any notice (written or
otherwise) from any governmental authority asserting or investigating
any alleged failure to comply with any applicable law, ordinance or
regulation.
(r) Inventory. None of the used vehicle inventories of the
Company and the Car-Mart Subsidiaries are obsolete, defective or
otherwise not saleable or usable in the ordinary course of business.
The levels of inventories currently on hand are not in excess of or
less than that necessary for the operation of the Company's and the
Car-Mart Subsidiaries' business in the ordinary course of business
consistent with past practices of the Company and the Car-Mart
Subsidiaries.
(s) Guarantees, Etc. Neither the Company nor the Car-Mart
Subsidiaries have given any guarantee, indemnity, warranty or bond, or
incurred any other similar obligation or created any security for or in
respect of, liabilities, actual or contingent, of any other person.
(t) OSHA. Neither the Company nor the Car-Mart Subsidiaries
have received notice of any violation by the Company or the Car-Mart
Subsidiaries, and to the best of the Sellers' knowledge and belief,
neither the Company nor any Car-Mart Subsidiary is in violation of and
has not been in violation of, the Occupational Safety and Health Act of
1970, including rules and regulations thereunder, or any
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other federal, state, local or foreign laws, including rules and
regulations thereunder, regulating or otherwise affecting employee
health and safety.
(u) Officers, Directors and Employees. Attached hereto as
Schedule 3(u) is a list of all officers, directors and employees of the
Company and the Car-Mart Subsidiaries and their current annual
compensation (or basis thereof). There are no amounts owed to any
officer, director or employee of the Company or the Car-Mart
Subsidiaries other than as reflected in the Company's Financial
Statements. Except as set forth on Schedule 3(u), no officer, director
or employee of the Company, the Car-Mart Subsidiaries, or any affiliate
of the Company, owns, directly or indirectly, beneficially or
otherwise, any material interest in, or is an employee, officer or
director of, or a consultant, agent for or representative of, any
customer, competitor or supplier of the Company or the Car-Mart
Subsidiaries.
(v) Absence of Adverse Agreements. Neither the Company nor the
Car-Mart Subsidiaries are a party to any instrument or agreement or
subject to any charter or other corporate restriction or any judgment,
order, writ, injunction, decree, award, rule or regulation which
materially and adversely affects the business, properties, assets or
condition, financial or otherwise, of the Company or the Car-Mart
Subsidiaries.
(w) No Defaults. Neither the Company nor the Car-Mart
Subsidiaries are in default under, nor has any event occurred which
with notice or lapse of time or both, could result in a waiver (except
caused by the statute of limitations) of any material right or default
under, any outstanding indenture, mortgage, lease, contract or
agreement to which the Company or the Car-Mart Subsidiaries is a party
or by
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which the Company, the Car-Mart Subsidiaries or their assets may be
bound, or under any provision of the Company's or the Car-Mart
Subsidiaries' Articles of Incorporation or By-Laws (or comparable
instruments). All liabilities of the Company and the Car-Mart
Subsidiaries are, and will be on the Closing Date, current and not in
default, and at Closing shall be not greater than the aggregate amount
permitted pursuant to Section 3(k) hereof.
(x) Banks, Signatories. Schedule 3(x) is a list setting forth
the name of each bank, savings and loan or other financial institution
in which the Company and the Car-Mart Subsidiaries have any account or
safe deposit box, the style and number of each such account or safe
deposit box and the names of all persons authorized to draw thereon or
to have access thereto, excepting only those bank accounts in which
minimum balances ($1,000 or less) are kept and which are swept on a
regular basis into consolidated accounts of the Company.
(y) No Conflicts. The execution and performance of this
Agreement and the transactions contemplated hereby will not violate any
provision of or result in a breach of or constitute a default under the
Articles of Incorporation or By-Laws of the Company and the Car-Mart
Subsidiaries, or under any order, writ, injunction or decree of any
court, governmental agency or arbitration tribunal, or under any
contract, agreement or instrument to which the Company or any Car-Mart
Subsidiary is a party or by which its properties may be bound, or under
any law, statute or regulation.
(z) Books and Records. The books and records of the Company
and the Car-Mart Subsidiaries are in all material respects complete and
correct and to the best
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of the Sellers' knowledge and belief, have been maintained in
accordance with good business practice and reflect a true record of all
meetings or proceedings of the Board of Directors and Shareholders of
the Company and the Car-Mart Subsidiaries.
(aa) Brokers. Except for Llama Company, neither the Company,
the Car-Mart Subsidiaries nor any Seller is a party to or in any way
obligated under a contract or other agreement, and there are no
outstanding claims against any of them, for the payment of any broker's
or finder's fees in connection with the origin, negotiation, execution
or performance of this Agreement. The fees of Llama Company related to
this Agreement shall be paid by the Sellers at Closing as specified in
Paragraph 2(a) hereof.
(bb) Environmental Matters.
(i) For the purposes of this Agreement, the following
definitions shall apply:
Environment: Ambient air, surface water, groundwater, soil,
sediment and land.
Environmental Conditions: Any environmental contamination of
any kind or nature resulting from the presence of Hazardous
Materials in the surface soils, subsurface soils, surface
waters or groundwater.
Environmental Laws: All existing federal, state or local laws
or ordinances and any regulations, rules, or administrative or
judicial rulings issued or promulgated thereunder and common
law relating to (a) Releases or threatened Releases of
Hazardous Materials or materials containing Hazardous
Materials; (b) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Materials or
materials containing Hazardous Materials; or (c) otherwise
relating to the protection of human health or the Environment,
including, without limitation, the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. Section
9601 et seq., ("CERCLA"), the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., ("RCRA"), the
Clean Water Act, 33-U.S.C. Section 1251 et seq., the Clean Air
Act, 42 U.S.C. Section 7401
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et seq., the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq., ("TSCA"), and all state analogues and
counterparts to any of the foregoing.
Facilities: The real property and improvements located at the
locations listed on Schedule 3(bb) attached hereto.
Hazardous Materials: Any substance defined as "Hazardous
Waste", "Hazardous Substance", "Hazardous Material", pollutant
or contaminant under any existing Environmental Laws.
Hazardous Materials include, without limitation, asbestos,
polychlorinated biphenyls and petroleum products.
Release: Any spilling, leaking, pumping, pouring, leaching,
emitting, emptying, discharging, injecting, escaping, dumping
or disposing of Hazardous Materials or materials containing
Hazardous Materials into the Environment.
(ii) Except as set forth in Schedule 3(bb), there are
no Environmental Conditions on, at, under or emanating from
the Facilities.
(iii) Except as set forth in Schedule 3(bb), neither
the Company nor any Car-Mart Subsidiary has received any
notice claiming or alleging that the Company or any Car-Mart
Subsidiary (1) has violated any applicable Environmental Laws;
or (2) is responsible or potentially responsible for any
remedial or removal action under any applicable Environmental
Laws, and on the date hereof to the best of the Sellers'
knowledge, no such claim is threatened.
(iv) Except as disclosed in Schedule 3(bb):
(1) the Company and the Car-Mart Subsidiaries have
all Permits required under applicable Environmental
Laws that are necessary to conduct the business of
the Company and the Car-Mart Subsidiaries as
presently conducted, the absence of which would have
a
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material adverse effect on the Company or the Car-
Mart Subsidiaries (the "Material Environmental
Permits"), and has provided copies of all the
Material Environmental Permits to the Purchaser;
(2) all the Material Environmental Permits are in
full force and effect and neither the Company nor any
Car-Mart Subsidiary is in material default of any
thereof;
(3) there is no threatened suspension, cancellation
or non-renewal of any of the Material Environmental
Permits or any basis for such suspension,
cancellation or non-renewal;
(4) the Company and the Car-Mart Subsidiaries shall
renew all the Material Environmental Permits that
shall expire on or before Closing; and
(5) Schedule 3(bb) lists all the Material
Environmental Permits which by their terms or by
operation of law will expire or otherwise become
ineffective upon or by reason of the completion of
the transaction contemplated in this Agreement. The
Sellers shall cause the Company and the Car-Mart
Subsidiaries to use their best efforts and cooperate
with the Purchaser in securing a reissue of such
Material Environmental Permits on substantially
similar terms so as to allow the Company and the Car-
Mart Subsidiaries to continue their business without
interruption after Closing.
(v) PCB Items. Except as set forth in Schedule 3(bb),
to the best of the Sellers' knowledge, none of the assets of
the Company or the Car-Mart Subsidiaries is a PCB Item (as
defined in 40 C.F.R. ss. 761.3).
(cc) Permits, Licenses, Etc. The Company and the Car-Mart
Subsidiaries have all Permits (except for Environmental Permits, which
are the subject of specific representations and warranties in Section
3(bb) hereof), that are required in order to
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carry on the Company's and the Car-Mart Subsidiaries' business as
presently conducted, the absence of which would have a material adverse
effect on the Company or the Car-Mart Subsidiaries (the "Material
Permits"), and is not in material default of any thereof. All Material
Permits are in full force and effect, and, to the best knowledge of the
Sellers, no suspension, cancellation or non-renewal of any Material
Permit is threatened, nor, to the best of the Sellers' knowledge, does
there exist any basis for such suspension, cancellation or non-renewal.
(dd) Software. Schedule 3(dd) contains a list or description
by type of all operating and applications computer programs and data
bases (the "Software") which the Company and the Car-Mart Subsidiaries
use or have available for use, and such Software constitutes all the
Software which is used to operate the business of the Company and the
Car-Mart Subsidiaries as currently conducted. All such Software is
owned outright by the Company and the Car-Mart Subsidiaries except as
indicated on Schedule 3(dd). As to any Software which Schedule 3(dd)
indicates is not owned by the Company or the Car-Mart Subsidiaries, the
owner of such Software is identified on Schedule 3(dd) and the Company
and the Subsidiaries have, and after Closing shall continue to have,
the right to use the same pursuant to valid leases or licenses
therefor. To the knowledge of the Sellers, none of the Software used by
or available to the Company and the Car-Mart Subsidiaries, and no use
thereof, infringes upon or violates any patent, copyright, trade secret
or other proprietary right of anyone else and no claim with respect to
any such infringement or violation is known to be threatened.
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(ee) Title to Shares and Authority. The Sellers now have and
on the Closing Date will have valid title to the Shares and on the
Closing Date will have full right, power and authority and due
authorization to sell and transfer the Shares to be sold hereunder, and
upon the delivery of and payment for the Shares to be sold to the
Purchaser hereunder, the Sellers will transfer to the Purchaser valid
title thereto, free and clear of any security interests, pledges, liens
or similar encumbrances. This Agreement constitutes the valid and
legally binding obligation of the Sellers, enforceable in accordance
with its terms.
(ff) Disclosure. Neither this Agreement, the Schedules
attached hereto, nor any other document furnished by the Company, the
Subsidiaries or the Sellers to Purchaser, taken as a whole, contains
any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein and therein not
misleading, and except as disclosed herein or therein, there is no fact
(other than matters of a general economic or a political nature which
do not effect the business of the Company or the Car-Mart Subsidiaries
uniquely) known to the Sellers which materially adversely effects or in
the future can be reasonably expected to materially adversely effect
the properties, business, operations or financial condition or
prospects of the Company or the Car-Mart Subsidiaries.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Sellers that:
(a) Organization, Standing and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, and has full corporate
power and authority to
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conduct its business as it is now being conducted, to enter into and
carry out the provisions of this Agreement.
(b) No Violation. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any provision of the Articles of Incorporation
or By-Laws of the Purchaser, (ii) violate any provision of any
agreement or other obligation to which the Purchaser is a party or by
which the Purchaser is bound or to which its assets are subject, or
(iii) violate or result in a breach of, constitute a default under, any
judgment, order, decree, rule or regulation of any court or
governmental agency to which the Purchaser is subject.
(c) Corporate Proceedings of the Purchaser. The execution,
delivery and performance of this Agreement has been authorized by the
Board of Directors of the Purchaser and this Agreement constitutes the
valid and legally binding obligation of the Purchaser, enforceable in
accordance with its terms.
(d) Financial Statements. The Purchaser has delivered to the
Sellers (i) the audited consolidated balance sheet of the Purchaser at
April 30, 1998 and the related consolidated statements of operations,
cash flows and changes in stockholder's equity for the Purchaser, all
for the year then ended, together with the related notes thereto, as
certified by PricewaterhouseCoopers, LLP, Certified Public Accountants,
and (ii) the unaudited consolidated balance sheet of the Purchaser at
July 31, 1998 (the "Crown Financial Statement Date") and the related
unaudited consolidated statements of operations and cash flows for the
Purchaser, all for the three (3) months then ended, as certified by the
Chief Financial Officer of the Purchaser (hereinafter collectively
called the "Crown Financial Statements"). The
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Crown Financial Statements (x) are in accordance with the books of
account and records of the Purchaser and fairly present the
consolidated financial position of the Purchaser at the dates
indicated, (y) contain and reflect reserves for all material
liabilities and (z) were prepared in accordance with GAAP on a basis
consistent with prior accounting periods. To the best of the
Purchaser's knowledge, except to the extent reflected and reserved
against in the Crown Financial Statements or the notes thereto, the
Purchaser is not subject to any liabilities (whether accrued, absolute,
contingent or otherwise) or adverse obligations, whether or not such
liabilities or obligations are normally shown or reflected on a balance
sheet, other than liabilities and obligations arising in the ordinary
course of business since the Crown Financial Statement Date, none of
which are material and adverse.
(e) Brokers. Except for ▇▇▇▇▇▇▇▇ Inc., the Purchaser is not a
party to or in any way obligated under a contract or other agreement,
and there are no outstanding claims against it, for the payment of any
broker's or finder's fees in connection with the origin, negotiation,
execution or performance of this Agreement. The fees of ▇▇▇▇▇▇▇▇ Inc.
related to this Agreement shall be paid by the Purchaser.
(f) Investment. The Shares will be acquired for investment and
not with a view to distribution thereof, nor with any intention of
distributing or selling or otherwise disposing of the Shares.
(g) Post-Closing Indemnity. The Purchaser, the Company and the
Car-Mart Subsidiaries shall be responsible for, and shall indemnify
and hold the Sellers harmless from any Losses (as hereinafter defined)
in the manner set forth in Section 11 hereof, arising out of, related
to or resulting from the business, operations or
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properties of the Company and the Car-Mart Subsidiaries arising after
the Closing Date, excepting those items (i) relating to acts or
omissions occurring prior to the Closing Date and (ii) matters for
which the Sellers are obligated to indemnify the Purchaser, the Company
and the Car-Mart Subsidiaries pursuant to this Agreement.
5. Additional Covenants and Agreements.
(a) Access to Records. Until the Closing Date or the
termination of this Agreement, the Sellers will furnish to the
Purchaser with unaudited monthly financial statements of the Company
and the Car-Mart Subsidiaries for each month following July, 1998,
promptly as available. At all reasonable times prior to Closing, the
Sellers shall cause the Company and the Car-Mart Subsidiaries to give
to the Purchaser, its counsel, accountants, and other representatives,
full and free access to all the properties, books, contracts,
commitments and records of the Company and the Car-Mart Subsidiaries so
that the Purchaser may have full opportunity to make such investigation
as it shall desire to make of the business and affairs of the Company
and the Car-Mart Subsidiaries, provided that such investigation shall
not unreasonably interfere with the operations of the Company and the
Car-Mart Subsidiaries. No investigation by the Purchaser heretofore or
hereafter made shall affect the representations and warranties of the
Sellers, and each such representation and warranty shall survive any
such investigation. If this Agreement is terminated, the Purchaser, its
officers, directors, employees, agents and authorized representatives
shall keep confidential and shall not use in any manner any information
or documents obtained from the Company and the Car-Mart Subsidiaries,
unless such information is readily ascertainable from public or
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published information, or trade sources, or already known or
subsequently developed by the Purchaser independently of any
investigation of the Company and the Car-Mart Subsidiaries, or
received from a third party not under an obligation to the Company and
the Car-Mart Subsidiaries to keep such information confidential.
Further, if this Agreement is terminated, the Purchaser shall
immediately return to the Company and the Car-Mart Subsidiaries any
documents obtained from the Company and the Car-Mart Subsidiaries
together with all copies thereof then in the Purchaser's possession or
under the Purchaser's control, and shall agree thereafter to keep the
contents thereof strictly confidential.
(b) Conduct of Business. Except as otherwise contemplated by
this Agreement, from the date hereof until the Closing Date, the
business of the Company and the Car-Mart Subsidiaries will be conducted
diligently and only in the ordinary course. For purposes of this
Paragraph 5(b), the phrase "ordinary course" shall mean the conduct of
the business of the Company and the Car-Mart Subsidiaries in the manner
which the Company and the Car-Mart Subsidiaries conducted their
business in the last twelve (12) months prior to the execution of this
Agreement, following their usual accounting practices, making ordinary
accruals, incurring ordinary liabilities or expenditures and making
ordinary contracts and commitments.
(c) Preservation of Goodwill. From the date hereof until the
Closing Date, subject to prudent business judgment, the Sellers will
use their best efforts to preserve the business organization of the
Company and the Car-Mart Subsidiaries, to keep available to the Company
and the Car-Mart Subsidiaries the services of the officers and
employees and to preserve for the Purchaser, the Company and the Car-
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Mart Subsidiaries the goodwill of all suppliers, customers and others
having business relations with them.
(d) Amendment to Schedules. The Sellers agree that, with
respect to their representations and warranties contained in this
Agreement, the Sellers shall have the right and continuing obligation
until the Closing to supplement or amend promptly the Schedules with
respect to any matter that would have been or would be required to be
set forth or described in the Schedules in order to not materially
breach any representation, warranty or covenant of the Sellers
contained herein. Each amendment or supplement to any Schedule shall be
clearly marked so as to indicate the amending or supplemental
information contained therein, which shall be presented in appropriate
detail, and shall be delivered prior to the Closing.
(e) Resignations. The Sellers agree to deliver to the
Purchaser at Closing (effective on the Closing Date) the resignations
of those officers and directors of the Company and the Car-Mart
Subsidiaries as may be requested by the Purchaser.
(f) Delivery of Materials. At the Closing, the Sellers shall
deliver to the Purchaser the minute books, stock certificate books,
corporate seals and other corporate books, records, data and papers of
the Company and the Car-Mart Subsidiaries.
(g) Covenant Against Competition. The Sellers agree that from
and after the Closing Date, they will not, directly or indirectly, for
five (5) years, but not to exceed the maximum period allowed by law,
(i) either on their own behalf or on behalf of any other person or
entity except in furtherance of the Company's and the Car-Mart
Subsidiaries' business, render their services, engage in or have a
financial
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interest in any business involving the sale and financing of used
vehicles or any business which is substantially similar to or directly
competitive with the business of the Company and the Car-Mart
Subsidiaries, in the States of Arkansas, Texas, Oklahoma, Missouri and
Kansas; and (ii) solicit any of the employees of the Company or the
Car-Mart Subsidiaries for employment by any person or entity other than
the Company or the Car-Mart Subsidiaries. The Sellers hereby
acknowledge that the foregoing restrictions are reasonable in scope and
necessary for the protection of the goodwill of Company and the
Car-Mart Subsidiaries and that a breach of this covenant would cause
the Purchaser, the Company and the Car-Mart Subsidiaries substantial
damage impossible of precise determination. Accordingly, in addition to
such other rights and remedies as may be available to the Purchaser,
the Company and the Car-Mart Subsidiaries in the event of any breach,
actual or threatened, of the foregoing provisions of this Section 5(g),
the Purchaser, the Company and the Car-Mart Subsidiaries (or any
successor or successors thereof) shall be entitled to enjoin such
breach, actual or threatened. The Sellers further agree that should any
portion of the foregoing covenant be unenforceable because of the scope
thereof or the period covered thereby or otherwise, the covenant shall
be deemed to be reduced and limited to enable it to be enforced to the
extent permissible under the laws and public policies in the
jurisdiction in which enforcement is sought.
(h) Exclusivity. After the signing of this Agreement until the
Closing Date or the termination of this Agreement, the Sellers shall
not (i) solicit, initiate, or encourage the submission of any proposal
or offer from any person or entity relating to the acquisition of any
capital stock or other voting securities of, or any substantial
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portion of the assets of, the Company or the Car-Mart Subsidiaries
(including any acquisition structured as a merger, consolidation or
share exchange) or (ii) participate in any negotiations or discussions
regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt
by any person or entity in favor of such acquisition (including any
acquisition structured as a merger, consolidation or share exchange).
The Sellers will (and shall cause the Company and the Car-Mart
Subsidiaries to) notify the Purchaser if any person or entity makes any
proposal, offer, inquiry or contact with respect to any of the
foregoing.
(i) Sellers' Release of Claims. Effective as of the Closing,
the Sellers hereby release, acquit and forever discharge the Company
and the Car-Mart Subsidiaries from any and all liabilities,
obligations, indebtedness, claims, demands, actions or causes of action
arising from or relating to any event, occurrence, act, omission or
condition occurring or existing on or prior to the Closing, including,
without limitation, any claim for indemnity or contribution from the
Company and the Car-Mart Subsidiaries, and waive any and all preemptive
or other rights to acquire any shares of capital stock of the Company
and the Car-Mart Subsidiaries and release any and all claims arising in
connection with any prior default, violation or failure to comply with
or satisfy any such preemptive or other rights. Prior to the Closing
Date, all amounts payable by America's Car-Mart to Dynamic shall be
forgiven, and all amounts payable by America's Car-Mart to ▇▇▇▇ ▇▇▇▇▇▇▇
shall be assigned by ▇▇▇▇ ▇▇▇▇▇▇▇ to the Company and the Company shall
convert such
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payable to equity in America's Car-Mart, and at Closing, America's
Car-Mart shall have no further liability for payables to Dynamic or
▇▇▇▇ ▇▇▇▇▇▇▇.
(j) Lease of Facilities. Contemporaneously with the Closing,
America's Car-Mart shall enter into lease agreements (the "Facilities
Lease Agreements") for the lease by America's Car-Mart of the real
properties and improvements owned by the Sellers or any Sellers'
Affiliates (collectively, the "Seller Lessors"), which properties are
listed on Schedule 5(j) attached hereto (the "Seller Leased
Properties"). Each of the Facilities Lease Agreements shall be for a
term of five (5) years from and after January 1, 1999 and shall be
renewable for two (2) additional five (5) year terms. The initial
monthly rent and renewal rent for the Seller Leased Properties shall be
as set forth on Schedule 5(j). The Facilities Lease Agreements shall be
in substantially the form of Exhibit "D" attached hereto.
(k) Distribution of Dynamic and AffiniTech. Contemporaneously
with the Closing, the Sellers shall cause the Company to distribute to
the Sellers all of the issued and outstanding capital stock of Dynamic
and AffiniTech. The Sellers shall be responsible for, and shall
indemnify and hold the Purchaser, the Company and the Car-Mart
Subsidiaries harmless from, any Losses in the manner set forth in
Section 10 hereof, arising out of, related to or resulting from the
business, operations or properties of Dynamic and AffiniTech arising
prior to or after the Closing Date. In addition, the liability of the
Company and the Subsidiaries for all income taxes as a result of the
distribution of the capital stock of Dynamic and AffiniTech to the
Sellers shall be the responsibility of, and shall be paid by, the
Sellers.
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(l) Escrow of Tax Liability. Contemporaneously with the
Closing, the Sellers shall deposit in escrow (the "Tax Escrow Account")
with a federally insured banking association (the "Escrow Agent") an
amount reasonably estimated to be equal to the Company's and the
Subsidiaries' liability for unpaid income taxes (current and deferred)
for all periods prior to the Closing Date (the "Company's Pre-Closing
Tax Liability"), all of which Pre-Closing Tax Liability is the sole
responsibility of, and shall be paid by, the Sellers (out of the Tax
Escrow Account or otherwise), and the Sellers shall indemnify and hold
the Purchaser, the Company and the Subsidiaries harmless from any
Losses related thereto in the manner set forth in Section 10 hereof.
The Sellers may, from time to time, withdraw from the Tax Escrow
Account such amounts as may be required to pay the Company's
Pre-Closing Tax Liability (or scheduled installments thereof), which
withdrawals shall be made payable to (i) the IRS if the Company's
Pre-Closing Tax Liability (or the applicable scheduled installment
thereof) has not been paid or (ii) the Sellers, if the Company's
Pre-Closing Tax Liability (or the applicable scheduled installment
thereof) has been paid by the Sellers, and the Sellers provide to the
Purchaser written evidence of the amount of Pre-Closing Tax Liability
which was due, and confirmation reasonably satisfactory to the
Purchaser of the payment of such amount to the IRS by the Sellers. The
Purchaser may, from time to time, withdraw from the Tax Escrow Account
such amounts as may be required to pay the Company's Pre-Closing Tax
Liability (or the applicable scheduled installment thereof) if the
Sellers have not paid the amount due on or before the fifteenth (15th)
day preceeding the due date for payment of the Company's Pre-Closing
Tax Liability (or the applicable scheduled installment
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thereof). The Escrow Agent shall be mutually agreed upon by the
Purchaser and the Sellers, and all fees of the Escrow Agent shall be
the responsibility of the Sellers. The Tax Escrow Account shall be
administered in accordance with the terms of an escrow agreement (the
"Tax Escrow Agreement"), which Tax Escrow Agreement shall be mutually
agreed upon by the Purchaser, the Sellers and the Escrow Agent. The
Purchaser and the Sellers agree to issue instructions to the Escrow
Agent in accordance with the terms of this Agreement. Interest earned
on the funds in the Tax Escrow Account will first be applied to payment
of the fees and expenses of the Escrow Agent, with the balance, if any,
being payable annually to the Sellers. The Tax Escrow Account shall
terminate when the Pre-Closing Tax Liability has been paid in full.
(m) Escrow of Liability for Breaches of Representations,
Warranties and Covenants. Contemporaneously with the Closing, the
Sellers shall deposit in escrow (the "Representations and Warranties
Escrow Account") with the Escrow Agent the sum of One Million
($1,000,000) Dollars as an escrow deposit to provide for the payment of
the Sellers' liability, if any, for a breach by the Sellers of any of
the representations, warranties and covenants of the Sellers contained
in this Agreement. The Purchaser may, from time to time, withdraw from
the Representations and Warranties Escrow Account such amounts as may
be required in order to obtain payment of Losses for which the Sellers
are responsible to indemnify the Purchaser, the Company and the
Car-Mart Subsidiaries as provided in Section 10 hereof. The Purchaser
and the Sellers agree to issue instructions to the Escrow Agent in
accordance with the terms of this Agreement. Interest earned on the
funds in the
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Representations and Warranties Escrow Account will be first applied to
the payment of the fees and expenses of the Escrow Agent, with the
balance, if any, being payable to the Sellers upon the termination of
the Representations and Warranties Escrow Account. The Representations
and Warranties Escrow Account shall terminate one (1) year after the
Closing Date, provided, however, the Representations and Warranties
Escrow Account shall continue with respect to any sums for which the
Purchaser has made a claim for Losses to be paid out of the
Representations and Warranties Escrow Account until such time as the
claim is paid or the Sellers are finally determined by a court of
competent jurisdiction to have no liability for such claim(s). The
Escrow Agent shall be mutually agreed upon by the Purchaser and the
Sellers, and all fees of the Escrow Agent shall be the responsibility
of the Sellers. The Representations and Warranties Escrow Account shall
be administered in accordance with the terms of an escrow agreement
(the "Representations and Warranties Escrow Agreement") which
Representations and Warranties Escrow Agreement shall be mutually
agreed upon by the Purchaser, the Sellers and the Escrow Agent. The
Purchaser and the Sellers agree to issue instructions to the Escrow
Agent in accordance with the terms of this Agreement.
(n) Crown Financial Statements. For so long as the Crown Notes
remain outstanding and unpaid, the Purchaser agrees to make available
to the Sellers the consolidated financial statements of the Purchaser
that are filed with the Securities and Exchange Commission ("SEC")
pursuant to the Purchaser's annual Form 10K and quarterly Form 10Q
filings with the SEC.
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6. Conditions to Obligations of the Purchaser. The obligation of the
Purchaser to consummate the transaction contemplated hereby shall be subject to
the satisfaction, on or before the Closing Date, of all of the following
conditions unless expressly waived in writing by the Purchaser:
(a) Representations and Covenants. All representations and
warranties of the Sellers contained in this Agreement shall be true in
all material respects on and as of the Closing Date as if such
representations and warranties were made on and as of such date (except
to the extent any such representation or warranty is made as of a
specified date), and the Sellers shall have performed all agreements
and covenants to be performed by the Sellers on or prior to the Closing
Date, and the Purchaser shall have received a certificate dated the
Closing Date, signed by the Sellers to the effect that such is the
case.
(b) Opinion of Counsel. The Purchaser shall have received the
opinion of ▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel for the Sellers, the Company
and the Car-Mart Subsidiaries, dated the Closing Date, to the effect
that:
(i) each of the Company and the Car-Mart Subsidiaries
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Arkansas and has
corporate power to carry on its business as it is now being
conducted;
(ii) the authorized capital stock and the outstanding
shares of the Company and the Car-Mart Subsidiaries are as set
forth herein, and the Shares are duly and validly issued,
fully paid, non-assessable and outstanding;
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(iii) the consummation of the transactions
contemplated by this Agreement will not result in the breach
of or constitute a default under the Articles of Incorporation
or By-Laws of the Company and the Car-Mart Subsidiaries, or,
to such counsel's knowledge, any loan, credit or similar
agreement or any court decree to which the Company, the
Car-Mart Subsidiaries or any of the Sellers are a party or by
which the Company, the Car-Mart Subsidiaries, the Sellers, or
their respective properties may be bound;
(iv) this Agreement has been duly executed and
delivered by the Sellers and constitutes the valid and binding
obligation of the Sellers enforceable in accordance with its
terms (except as otherwise limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting
creditors' rights and except that such counsel need not
express an opinion as to whether any covenant contained herein
is specifically enforceable);
(v) the transfer of the Shares from the Sellers shall
vest in the Purchaser valid ownership in the Shares, free and
clear of all security interests, pledges, liens, encumbrances,
charges or assessments, and no other endorsement is required
to transfer such ownership to the Purchaser, and such counsel
is not aware of any adverse claim with respect to the Shares.
(c) No Damage or Destruction. Prior to the Closing Date, there
shall not have occurred any casualty to any facility, property,
equipment or inventory owned
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or used by the Company or the Car-Mart Subsidiaries as a result of
which either the monetary amount of damage or destruction aggregates
five (5%) percent or more of the aggregate book value shown on the
books of account of the entire facilities, properties, equipment and
inventory of the Company or the Car-Mart Subsidiaries, or is more than
$50,000, and such loss shall not be substantially covered by valid,
existing insurance underwritten by responsible insurers.
(d) No Material Adverse Changes. Prior to the Closing Date,
there shall not have been any material adverse change in the business,
operations, financial condition or properties of the Company and the
Car-Mart Subsidiaries since the date of the most recent Company's
Financial Statements (July 31, 1998), and the Purchaser shall have
received a certificate dated the Closing Date, signed by the Sellers to
the effect that such is the case.
(e) Absence of Litigation. No litigation, governmental action,
insolvency, receivership or other proceeding shall have been
threatened, asserted or commenced with respect to the transaction
contemplated herein.
(f) Consents. The Sellers shall have obtained all approvals
and consents which must be obtained in order to effectuate the
transaction contemplated hereby and to satisfy the terms and conditions
of this Agreement.
(g) Financing. The Purchaser shall have obtained financing for
the transaction contemplated hereunder on terms satisfactory to the
Purchaser. The Purchaser shall provide the Sellers and Llama Company on
or before December 1, 1998, with a copy of a commitment letter for such
financing.
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(h) Lease of Facilities. America's Car-Mart and the Seller
Lessors shall have entered into the Facilities Lease Agreements.
(i) Employment Agreements. ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and America's Car-Mart's
Regional Managers - ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇, shall have entered into Employment Agreements with the
Company or America's Car-Mart on terms satisfactory to the Purchaser
and each of such individuals.
(j) Escrow Agreements. The Purchaser, the Sellers and the
Escrow Agent shall have entered into the Tax Escrow Agreement and the
Representations and Warranties Escrow Agreement, respectively, and the
deposit of funds into the Tax Escrow Account and the Representations
and Warranties Escrow Account, as required herein, shall have been made
by the Sellers.
(k) Due Diligence. The Purchaser's due diligence investigation
of the Company and the Car-Mart Subsidiaries as contemplated pursuant
to Section 5(a) hereof shall have been completed to the satisfaction of
the Purchaser.
(l) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing and Approval. The Purchaser and
the Sellers (and any other required parties) shall have made any
filings with the Federal Trade Commission required by the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, the required
waiting periods thereunder shall have expired, and the parties shall
not have received any objection to the consummation of the transactions
contemplated by this Agreement.
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7. Conditions to Obligations of the Sellers. The obligation of the
Sellers to consummate the transaction contemplated hereby shall be subject to
the satisfaction, on or before the Closing Date, of all of the following
conditions, unless expressly waived in writing by the Sellers:
(a) Representations and Covenants. All representations and
warranties of the Purchaser contained in this Agreement shall be true
in all material respects on and as of the Closing Date as if such
representations and warranties were made on and as of such date and the
Purchaser shall have performed all agreements and covenants to be
performed by it on or prior to the Closing Date, and the Sellers shall
have received a certificate dated the Closing Date, signed by the
President or a Vice President of the Purchaser, to the effect that such
is the case.
(b) Opinion of Counsel. The Sellers shall have received the
opinion of ▇. ▇. ▇▇▇▇▇▇▇, III, General Counsel for the Purchaser, dated
the Closing Date, to the effect that:
(i) the Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Texas and has corporate power to carry on its
business as it is now being conducted;
(ii) this Agreement has been duly authorized,
executed and delivered by the Purchaser, and (assuming valid
execution and delivery by the other parties hereto) is, or
will be upon such execution, the valid and binding obligation
of the Purchaser in accordance with its terms (except as
otherwise limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting
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creditors' rights, and except that such counsel need not
express an opinion as to whether any covenant contained herein
or therein is specifically enforceable); and
(iii) to such counsel's knowledge, the consummation
of the transactions contemplated by this Agreement will not
result in the breach of or constitute a default under the
Articles of Incorporation or By-Laws of the Purchaser, or any
loan, credit or similar agreement or any court decree to which
the Purchaser is a party or by which the Purchaser or its
properties may be bound.
(c) Certified Resolutions. The Sellers shall have received
resolutions of the Board of Directors of the Purchaser, certified by
the Secretary or an Assistant Secretary of the Purchaser, authorizing
the execution, delivery and performance of this Agreement.
(d) No Material Adverse Changes. Prior to the Closing Date,
there shall not have been any material adverse change in the business,
operations, financial condition or properties of the Purchaser since
the date of Crown's Financial Statements, and the Sellers shall have
received a certificate dated the Closing Date, signed by the President
or a Vice President of the Purchaser to the effect that such is the
case.
(e) Lease of Facilities. America's Car-Mart and the Seller
Lessors shall have entered into the Facilities Lease Agreements.
(f) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing and Approval. The Purchaser and
the Sellers (and any other required parties) shall have made any
filings with the Federal
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Trade Commission required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, the required waiting periods thereunder shall
have expired, and the parties shall not have received any objection to
the consummation of the transactions contemplated by this Agreement.
8. The Closing. The execution and delivery of this Agreement and the
instruments, certificates and other documents required hereunder (the "Closing")
shall take place at the offices of Crown Group, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. local time on January
18, 1999, or at such earlier time and day or other location as may be mutually
agreed by the Purchaser and the Sellers. The date and time of such execution and
delivery is herein called the "Closing Date", and the effective date of the
Closing shall be 12:01 a.m., Dallas, Texas time on the Closing Date. On the
Closing Date, certificates representing the Shares shall be delivered by the
Sellers against delivery of the Purchase Price pursuant to Section 2 hereof, and
Closing shall be deemed to have occurred when such deliveries have been made by
the Purchaser and the Sellers in accordance with the terms hereof.
9. Nature and Survival of Representations and Warranties.
(a) Nature of Statements. All statements contained in any
schedule or any certificate or other instrument delivered by or on
behalf of the Sellers or the Purchaser pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties made by the Sellers or the Purchaser, as
the case may be.
(b) Survival of Representations and Warranties. All
representations, warranties, covenants, agreements and undertakings
contained herein or in any Schedule, certificate or other document
shall remain operative and in full force and
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effect, and shall survive the Closing Date and the delivery of all
consideration and documents pursuant to this Agreement, and shall
continue in effect for a period of two (2) years after the Closing Date
and, as to representations made by the Sellers concerning or affecting
any tax liability of the Company or the Subsidiaries, until a date
which is six (6) months after the statute of limitations has run
against the Federal, state and local government; provided, however,
that any such representation, warranty, covenant, agreement or
undertaking as to which a bona fide claim shall have been asserted
during such survival period shall continue in effect until such time as
such claim shall have been resolved in accordance with the terms of
this Agreement.
10. Indemnification by Sellers and Related Matters.
(a) Indemnification by Sellers. The Sellers, jointly and
severally, agree to defend, indemnify and hold harmless the Purchaser,
the Company and the Car-Mart Subsidiaries, and their respective
successors and assigns, from, against and in respect of any and all
loss or damage resulting from:
(i) the breach by the Sellers of any of their
warranties, representations, covenants, agreements or
undertakings contained herein; and
(ii) any liability arising out of any and all
actions, suits, proceedings, claims, demands, judgments, costs
and expenses (including reasonable legal and accounting fees)
incident to any of the foregoing (collectively, the "Losses").
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(b) Procedure for Making Claims. If and whenever the Purchaser
desires to claim indemnification by the Sellers pursuant to the
provisions of this Section 10, the Purchaser shall promptly deliver to
the Sellers a certificate signed by the Chairman of the Board,
President or Vice President of the Purchaser (the "Notice of Claim")
(i) stating that the Purchaser, the Company or the Car-Mart
Subsidiaries, their successors and assigns, has paid or properly
accrued Losses in an aggregate stated amount to which the Purchaser is
entitled to indemnification pursuant to this Section 10, provided,
however, such notice shall be given prior to the payment of an
indemnity item if reasonable in light of the circumstances causing, or
threatening to cause, a Loss, and (ii) specifying the individual items
of Loss included in the amount so stated, the date each such item was
paid or properly accrued and the nature of the misrepresentation,
breach of warranty or claim to which such item is related. The Sellers
shall have the right to defend any claim by a third party at the
expense of the Sellers. The Purchaser, the Company and the Car-Mart
Subsidiaries, as the case may be, shall provide to the Sellers prompt
and complete disclosure of all pertinent information in the possession
of or available to the Purchaser, the Company or the Car-Mart
Subsidiaries and shall extend full and timely assistance in the
cooperation in the investigation of the defense of the claim, suit or
action, with respect to which such indemnification is claimed. The
Sellers, in the defense of any such suit, action or proceeding, shall
not consent to the entry of any judgment or decree except with the
written consent of the Purchaser, the Company and the Car-Mart
Subsidiaries, nor enter into any settlement (except the written consent
of the Purchaser and the Company) which does not include as an
unconditional term thereof the giving by the
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claimant or plaintiff to the Purchaser, the Company and the Car-Mart
Subsidiaries of a release from every liability in respect of such
claim, suit, action or proceeding. In any defense of any claim by a
third party, the Purchaser and the Company shall have the right (but
shall not be obligated) to participate in such defense through counsel
of its own selection and at its own expense.
11. Indemnification by the Purchaser and Related Matters.
(a) Indemnification by the Purchaser. The Purchaser agrees to
defend, indemnify and hold harmless the Sellers, their heirs,
administrators, personal representatives, successors and assigns from,
against and in respect of any and all loss or damage resulting from:
(i) the breach by the Purchaser of any of its
warranties, representations, covenants, agreements or
undertakings contained herein; and
(ii) any liability arising out of any and all
actions, suits, proceedings, claims, demands, judgments, costs
and expenses (including reasonable legal and accounting fees)
incident to any of the foregoing (collectively, the "Losses").
(b) Procedure for Making Claims. If and whenever the Sellers
desire to claim indemnification by the Purchaser pursuant to the
provisions of this Section 11, the Sellers shall promptly deliver to
the Purchaser a certificate signed by the Sellers (the "Notice of
Claim") (i) stating that the Sellers, their respective heirs,
administrators, personal representatives, successors or assigns, have
paid or properly accrued Losses in an aggregate stated amount to which
the Sellers are entitled to
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indemnification pursuant to this Section 11, provided, however, such
notice shall be given prior to the payment of an indemnity item if
reasonable in light of the circumstances causing, or threatening to
cause, and (ii) specifying the individual items of Loss included in the
amount so stated, the date each such item was paid or properly accrued
and the nature of the misrepresentation, breach of warranty or claim to
which such item is related. The Purchaser shall have the right to
defend any claim by a third party at the expense of the Purchaser. The
Sellers shall provide to the Purchaser prompt and complete disclosure
of all pertinent information in the possession of or available to the
Sellers and shall extend full and timely assistance in the cooperation
in the investigation of the defense of the claim, suit or action, with
respect to which such indemnification is claimed. The Purchaser, in the
defense of any such suit, action or proceeding, shall not consent to
the entry of any judgment or decree except with the written consent of
the Sellers nor enter into any settlement (except the written consent
of the Sellers) which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to the Sellers of a release
from every liability in respect of such claim, suit, action or
proceeding. In any defense of any claim by a third party, the Sellers
shall have the right (but shall not be obligated) to participate in
such defense through counsel of their own selection and at their own
expense.
12. Expenses. The Sellers and the Purchaser shall pay their or its own
expenses (including without limitation counsel and accounting fees and expenses)
incident to the preparation and carrying out of this Agreement and the
consummation of the transactions contemplated hereby.
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13. Notices. All notices, demands and requests which may be given or
which are required to be given by either party to the other, and any exercise of
a right of termination provided by this Agreement, shall be in writing and shall
be deemed effective when either: (1) personally delivered to the intended
recipient; (2) sent by certified or registered mail, return receipt requested,
addressed to the intended recipient at the address specified below; (3)
delivered in person to the address set forth below for the party to which the
notice was given; (4) deposited into the custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, ▇▇▇▇▇ or
Purolator, addressed to such party at the address specified below; or (5) sent
by facsimile, telegram or telex, provided that receipt for such facsimile,
telegram or telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above. Notices shall be
effective on the date of delivery or receipt, of, if delivery is not accepted,
on the earlier of the date that delivery is refused or three (3) days after the
date the notice is mailed. For purposes of this Paragraph, the addresses of the
parties for all notices are as follows (unless changes by similar notice in
writing are given by the particular person whose address is to be changed):
(a) if to the Sellers, to ▇▇▇▇ ▇. ▇▇▇▇▇, on behalf of the
Sellers, ▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Fax
(▇▇▇) ▇▇▇-▇▇▇▇;
With copies to ▇▇▇▇▇ ▇. Truetzel, Managing Director, Llama
Company, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
Fax (▇▇▇) ▇▇▇-▇▇▇▇; and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Director, Llama
Company, ▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Fax
(▇▇▇) ▇▇▇-▇▇▇▇;
(b) or if to the Purchaser, to Crown Croup, Inc., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, President; Fax (▇▇▇) ▇▇▇-▇▇▇▇;
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With a copy to ▇. ▇. ▇▇▇▇▇▇▇, III, Executive Vice President
and General Counsel, Crown Croup, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Fax (▇▇▇) ▇▇▇-▇▇▇▇.
Any party hereto may designate a different address by written notice given to
the other parties.
14. Satisfaction of Conditions; Termination; Liquidated Damages.
(a) Best Efforts to Satisfy Conditions. The Sellers agree to
use their best efforts to bring about the satisfaction of the
conditions specified in Section 6 hereof, and the Purchaser agrees to
use its best efforts to bring about the satisfaction of the conditions
specified in Section 7 hereof.
(b) Termination. This Agreement may be terminated, without
liability on the part of any party hereto to any other party hereto,
by:
(i) the Purchaser, if a material default shall be
made by the Sellers in the observance or in the due and timely
performance by the Sellers of any of the covenants of the
Sellers herein contained, or if there shall have been a
material breach by the Sellers of any of the warranties and
representations of the Sellers herein contained, or if the
conditions of this Agreement to be complied with or performed
at or before the Closing shall not have been complied with or
performed at the time required for such compliance or
performance and such non-compliance or non-performance shall
not have been waived by the Purchaser, or if the Closing shall
not have occurred on or before January 18, 1999; or
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(ii) the Sellers, if a material default shall be made
by the Purchaser in the observance or in the due and timely
performance by the Purchaser of any of the covenants of the
Purchaser herein contained, or if there shall have been a
material breach by the Purchaser of any of its warranties and
representations herein contained, or if the conditions of this
Agreement to be complied with or performed by the Purchaser at
or before the Closing shall not have been complied with or
performed at the time required for such compliance or
performance and such non-compliance or non-performance shall
not have been waived by the Sellers, or if the Closing shall
not have occurred on or before January 18, 1999.
In the event of termination by the Purchaser or the Sellers as provided above,
written notice shall forthwith be given to the other parties.
(c) Failure of the Purchaser to Close. If the Purchaser fails
to close the transaction contemplated herein and (i) there has been no
material default made by the Sellers in the observance or in the timely
performance by the Sellers of any of the covenants of the Sellers
herein contained, (ii) no material breach by the Sellers of any of the
warranties and representations of the Sellers herein contained has
occurred, (iii) all of the conditions of this Agreement to be complied
with or performed at or before the Closing have been complied with or
performed at the time required for such performance, or such
non-compliance or non-performance has been waived by the Purchaser, and
(iv) the Sellers have not otherwise breached this Agreement, then the
Purchaser shall pay to the Sellers the sum of Three Hundred Thousand
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($300,000) Dollars (the "Termination Fee"), which Termination Fee shall
be deemed liquidated damages (and not a penalty) and the Sellers' sole
and exclusive remedy for the Purchaser's breach and failure to close
the transaction contemplated herein, and the Purchaser shall have no
further obligation or liability to the Sellers hereunder.
15. Miscellaneous.
(a) Assignment. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties,
provided, however, the Purchaser shall have the right at any time prior
to Closing to assign this Agreement to a corporation wholly owned by
the Purchaser, so long as the Purchaser, by written agreement
reasonably acceptable to the Sellers, agrees to guarantee the
performance by such assignee of the terms and provisions hereof.
Subject to the foregoing, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
heirs, administrators, personal representatives, successors and
assigns.
(b) Section and Paragraph Headings. The Section and Paragraph
headings of this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
(c) Amendment. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.
(d) Entire Agreement. This Agreement and the Exhibits,
Schedules, certificates and documents referred to herein constitute the
entire agreement of the parties, and supersede all understandings with
respect to the subject matter hereof.
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(e) Knowledge. "Best knowledge" of a natural person means
actual knowledge of such natural person, and "best knowledge" of a
corporate person means actual knowledge of the directors, officers and
employees of such corporate person, in each case (unless otherwise
specifically set forth to the contrary) after reasonable inquiry and
investigation.
(f) Public Announcements. No publication and/or press release
of any nature shall be issued pertaining to this Agreement or the
transaction contemplated hereby without the prior written approval of
the Purchaser and the Sellers, except as may be required by law.
(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(h) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, AND
VENUE FOR ANY DISPUTE ARISING HEREUNDER SHALL BE IN DALLAS COUNTY,
TEXAS, AND THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE JURISDICTION OF
THE COURTS OF THE STATE OF TEXAS.
* (i) Joinder of Spouses. The spouses of the Sellers, by their
execution hereto, herein confirm and acknowledge that they concur with
this sale of the Shares to the Purchaser by the Seller to whom they are
married in accordance with the terms and provisions of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties on or as of the date and year first above written.
PURCHASER:
----------
CROWN GROUP, INC.
By:
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
SPOUSES: SELLERS:
-------- --------
▇▇▇▇ ▇▇▇▇▇▇▇ REVOCABLE TRUST
u/d/t January 12, 1998
By:
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
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----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
CHILDREN'S TRUST #1
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ R. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
CHILDREN'S TRUST #1
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Greehey,
Trustee
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ CHILDREN'S TRUST #1
By:
-------------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
----------------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
BART ▇▇▇▇▇ ▇▇▇▇▇▇▇ CHILDREN'S TRUST #1
By:
-------------------------------------
Bart ▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇ CHARITABLE REMAINDER
ANNUITY TRUST
By:
-------------------------------------
▇▇▇ ▇. ▇▇▇▇▇, Trustee
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